Monthly Archives: January 2016


Cummins Ltd., In re  A.A.R NO. 1152 OF 2011 (dated 12.01.2016) Background: Cummins Limited, UK is a company incorporated in the UK. Cummins Technologies India Limited (CTIL) is a company incorporated in India. CTIL is engaged in the business of manufacture and sale of turbochargers. CTIL purchases turbocharger components directly from third party in UK and US and in relation to such purchases, Cummins Limited provides supply management services vide Material Suppliers Management Service Agreement.  As per the agreement CTIL pays supply management service fees calculated at 5% of the base prices from the suppliers As per the agreement, Cummins Ltd, UK is responsible for following activities: – Finalization of supplier prices from UK and US suppliers and ensuring market- competitive pricing from suppliers; – Ensuring that the approved suppliers have the necessary manufacturing capacities and infrastructure to provide for the raw material requirements; – Assisting in ensuring on-time delivery of components by the suppliers to Cummins India as well as resolution of delivery performance issues with suppliers, if any – Ensuring that suppliers maintain strict compliance with the standards, procedures and processes and support in obtaining response from supplier to any quality control violation issue; and – Performance review of the supplier  Cummins Ltd does not have a permanent establishment (PE) in India in respect of the supply management services as per the provisions of the India-UK Treaty.

‘Managerial services’ do not fall within the ambit of ‘fees for technical services’; not taxable ...